Where is your next rural branch opening? It’ll help eradicate poverty!04/09/2008

Here’s a no-brainer – what can the rural banks in India do to the poor in the country, which the poor can’t do to the banks? Can’t guess? Read on... A paper by Burgess and Pande of the London School of Economics titled ‘Can Rural Banks Reduce Poverty?’ proves that “rural branch expansion in India between 1977 and 1990 significantly reduced rural poverty”. Sadly, even today, while corporate entities from all segments are foraying into the Indian hinterlands, national banks are literally crawling ahead at a pace which even a snail would mock!

Even as per a 2008 survey by IIMS DataWorks, only a pathetic 44.9% of “Indian earners” held bank accounts in 2007. Even worse, only 38% of those in rural India held any bank account as compared to a healthy 62% for urban Indians. If you though we were missing out the hub of capitalistic acts, here’s a shocker – even in New Delhi, only 62% of population had any bank account. And if literacy was to be blamed, hold your breath – Tamil Nadu which has close to 75% literacy rate has only 18% of its State residents making their way to the banks! Literacy be damned!

Surely, if solving national poverty has solutions, this is an obvious one. Microfinance, ‘no-frills’ banking accounts et al are simply tools by which those 80% unfortunate Indians (who live on less than $2/day), can hope for higher standards of living. A UN report also clarifies that a “voice and fingerprint navigated ATM will be of great help for the poor.” Now to answer the question asked in the first line... mmm... well, you’ve got it by now, haven’t you?!